Wiseman Video plans to make four annual deposits of $2.000 each to a special bui

Question

Wiseman Video plans to make four annual deposits of $2.000 each to a special building fund. The fund's assets E 6-7 Future value; annuities priate annuity table, determine how much wil be accumulated in the fund on December 31, 2021, under each of the following situations: I. The first deposit is made on December 31. 2018, and interest is compounded annually. 2. The first deposit is made on December 31. 2017, and interest is compounded annually. 3. The first deposit is made on December 31. 2017, and interest is compounded quarterly. 4. LO6-6 The first deposit is made on December 31. 2017, interest is compounded annually, and interest earned is withdrawn at the end of each year.

Explanation / Answer

Answer = 1 Year   Deposite Disconting Factor @ 12% Cumulative amount Cumulative Value 1 $       2,000.00 $                                                 1 $           2,000.00 $                   2,000.00 2 $       2,000.00 $                                           1.12 $           2,240.00 $                   4,240.00 3 $       2,000.00 $                                           1.25 $           2,508.80 $                   6,748.80 4 $       2,000.00 $                                           1.40 $           2,809.86 $                   9,558.66 Answer =   $           9,558.66 Answer = 2 Year   Deposite Disconting Factor @ 12% Cumulative amount Cumulative Value 1 $       2,000.00 $                                           1.12 $           2,240.00 $                   2,240.00 2 $       2,000.00 $                                           1.25 $           2,508.80 $                   4,748.80 3 $       2,000.00 $                                           1.40 $           2,809.86 $                   7,558.66 4 $       2,000.00 $                                           1.57 $           3,147.04 $                 10,705.69 Answer =   $         10,705.69 Answer = 3 Annual interest rate = 12% ; So quarterly interest rate = 12% /4 = 3%   Year   Deposite Interest @ 3% Cumulative Value 1 $       2,000.00 $                                        60.00 $           2,060.00 2 $                                        61.80 $           2,121.80 3 $                                        63.65 $           2,185.45 4 $                                        65.56 $           2,251.02 5 $       2,000.00 $                                      127.53 $           4,378.55 6 $                                      131.36 $           4,509.90 7 $                                      135.30 $           4,645.20 8 $                                      139.36 $           4,784.56 9 $       2,000.00 $                                      203.54 $           6,988.09 10 $                                      209.64 $           7,197.74 11 $                                      215.93 $           7,413.67 12 $                                      222.41 $           7,636.08 13 $       2,000.00 $                                      289.08 $           9,925.16 14 $                                      297.75 $         10,222.92 15 $                                      306.69 $         10,529.60 16 $                                      315.89 $         10,845.49 Answer =   $         10,845.49 Answer = 4 Interest is withdrawn at the end of the every year so ther is no accumulation of interest So, Accumulated fund at December 31, 2021 = $ 2,000 X 4 Years = $ 8,000

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